Economy

Moutai Riddle: Pricier in China, cheaper abroad

(Xinhua)
Updated: 2011-02-20 11:22

BEIJING - Foreign luxury products have monopolized the shopping list of Chinese tourists heading overseas for years, but more Chinese tourists are grabbing up Chinese brands sold on foreign markets, since they are sold at lower prices.

When a man surnamed Li, a clerk from a foreign company in Beijing, returned from the United States after visiting his family, he brought home several bottles of Moutai, one of the best known Chinese liquor brands.

"It is much cheaper abroad, many of my friends also buy high-end tobacco and wine of Chinese brands from overseas," Li said.

Related readings:  No CPI sigh of relief  Revised CPI basket shows slight inflation drop  Moutai prices cut by nearly half in foreign markets

According to media reports, Moutai's star product, the 375ml bottle of 53-degree Flying Moutai, was sold at around 550 yuan ($83.66) at stores in Washington.

On the Chinese mainland, the same product was priced almost twice as much, at around 1,050 yuan.

Lower price tags, which sources with Kweichow Moutai Company attributed to market strategy, attracted many price-conscious Chinese consumers to purchase China-made products overseas.

According to Moutai's distributor in North America, sales began to pick up last December because Moutai liquor is regarded as the ideal gift for family and friend reunions during the Lunar New year, which started on February 3 this year.

"Our January sales are equal to what we normally sell during the whole year. Most customers are from China," he said.

Other native brands, such as liquor giant Wuliangye and Chunghua tobacco, also saw sales surge on foreign markets as more Chinese were attracted by lower prices.

Services offered on China's e-commerce websites also make it more convenient for native customers who cannot afford outbound trips.

On Taobao.com, China's largest online retail site, traders purchased products from foreign countries and delivered them to customers across China. This has prompted more Chinese residents to buy overseas.

Analysts attributed the new trend to the price chasm connected with China's growing appetite for high-end products.

On January 1, Kweichow Moutai raised the factory price of Flying Moutai by 20 percent, bringing the price to 619 yuan. Meanwhile, it suggested a maximum retail price of 959 yuan, an increase of 90 yuan, over the former price.

But many retail outlets are sold Flying Moutai at even higher prices due to the huge festival demand. With investment options in China being reduced due to government efforts to rein in the runaway property market, investors in the country are targeting commodities such as tea, wine, gold, china and liquor for profits.

On December 14 last year, a bottle of Moutai produced in 1958 was sold at 1.46 million yuan ($222,114) at an auction in Hangzhou. Several days later, a bottle of Wuliangye was sold at auction for 5.09 million yuan ($774,356) in Yibin, Sichuan province.

Experts also cited the difference in the consumption culture between China and foreign countries as one of the main reasons behind the price variance.

"In China, Moutai liquor is associated with social status and, therefore, is much sought-after by customers. But in the United States, it is not regarded in this way, thus the demand is not high," said Zhang Junsheng, an expert from the University of International Business and Economics.